The European Investment Bank (EIB) is lending EUR 175 million to Ukraine to reinforce the electrical connections between the country’s eastern and southern regions.
EIB Vice-President Anton Rop stated: “This project will contribute to the better utilisation of Ukraine’s electricity generation capacity, reduce electricity transmission losses and improve the security of the electricity supply for the benefit of Ukraine’s citizens and economy while helping to meet increased electricity demand in the future”.
The project, which is being co-financed by the European Bank for Reconstruction and Development (EBRD) with a loan of EUR 175 million, will also help Ukraine to harmonise its electricity network with the European electricity transmission system in the medium term. It will serve to optimise the use of existing electricity generation capacity, resulting in a reduction of generation from inefficient coal and gas-fired power plants with positive consequences in terms of decreased CO2 emissions and increased network reliability.
The project will receive a contribution under the Neighbourhood Investment Facility to support its implementation.
The EIB loan will co-finance the construction of:
- a new 190 km 750 kV overhead line running between Zaporizhzhia and Kakhovska in southern Ukraine,
- a new 750kV substation at Kakhovska,
- 330 kV diversions of two existing overhead lines from Novokakhovska to Ostrovska and from Novokakhovska to Kherson to the new 750 kV Kakhovska substation,
- auxiliary facilities such as housing and a repair and maintenance area and rehabilitation works at the existing 330kV Novokakhovska, Kherson and Ostrovska substations.
Ukraine’s National Power Company Ukrenergo is the project promoter and the final beneficiary of this EIB loan. This is Ukrenergo’s second transmission project supported by the EIB.
Background:
The EIB – the European Union’s bank – finances projects in Ukraine on the basis of an EU Council and European Parliament mandate for the Eastern Partner Countries (Ukraine, Moldova, Georgia, Armenia, Azerbaijan and Russia) of EUR 3.7 billion for the period 2007-2013. The current mandate provides for the financing of projects that are of significant interest to both the EU and its Eastern Partners in the transport, energy, telecommunications and environmental infrastructure sectors. As of mid-2009 it has been extended to also cover loans for SMEs via banks in Eastern Partnership countries.
The EIB has also set up at its own risk the Eastern Partners Facility (EPF) for an amount of EUR 1.5 billion, with a ceiling of EUR 500 million for loans in Russia. This facility enables the EIB to provide loans to support investment grade projects that sectorwise go beyond the scope of the mandate and helps to promote EU investment in the region, notably by European corporates.
The EIB has so far provided loans in Ukraine, including the current loan, totalling some EUR 1.1 billion covering projects in the areas of road and water infrastructure, the energy sector and – indirectly through commercial banks – projects supporting SMEs.